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tv   Bloomberg Markets European Open  Bloomberg  April 25, 2022 3:00am-4:00am EDT

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he defeats marine le pen to secure another five-year term. the markets are opening pretty ugly. a lot of fears around covid lockdowns and risk aversion. tom: the majority of investors on that optimism that some have looked for this monday morning being overshadowed by what we are seeing out of china. you have the markets know looking at 50 basis points across four hikes from the federal reserve. the concern about omicron when it hits beijing and its 3.5 million people. they're compelled to have three covid tests this week ended as part of the city of beijing being locked down as well. the supply and demand picture being affected. we have moves on commodities and the yuan in china as well.
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the ftse 100 down 1.5%. the cac in france is down 2% despite the fact that macron has proved victorious in the presidential vote. let's switch to see how things are playing out with a look ahead to the united states and the open there on this monday. futures stateside pointing to losses of 1%. the csi 300 dropped below a level we have not seen since may of 2020. at one point the shanghai compass it crossed the 3000 level which is a key point for investors. what will policymakers do to assuage concerns of investors of the broader trajectory of the economy? you can see the u.s. 10 year jump by seven basis points. in terms of wti, you are looking
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at $98. that is on-demand concerns out of china. francine, you have been in paris and following the results. the polls certainly got this one right but as you say, no big shock because the markets were expecting macron to get a second term. francine: there are some nuances. it depends on whether he gets a parliamentary majority in june to get his reforms through. but also this is a fractured france and he says that in his victory speech, it is not that people voted for him, but that a lot of people did not want marine le pen. she did bring 42% given what she represents of the right. people in the country will regroup today and emmanuel macron will try to figure out
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how to be a president for everyone. tom: whether he can secure that mandates to push forward the key reforms. francine: the reforms on the pensions and other things. it is interesting to see a big lift in the euro yesterday but because the polls were right on the markets expected them to the -- them to be right, there was not much movement. french banks really taken with concerns of lockdowns in china so it is not the macron input right now. let's get into the key market drivers with bloomberg's mliv managing editor, mark cudmore. what is driving this risk off right now? mark: today it is all about china, concern about those lockdowns in china. concern about the pboc policies around the yuan. it is also in the matters that
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the pboc is not going to provide as much easing as people were expecting. that is why chinese stocks were down 5% on the benchmark. it is back to the worst day for mainland chinese stocks since may of 2020. it is a good question to ask what is driving it because this is hitting a market that is vulnerable because of the friday price action. the friday situation was much more about inflation, higher yields. it was a different dynamic so this market is vulnerable, worried about financial conditions globally. it is also that the world's second-largest economy might be set for much more intensive lockdowns and set to increase the inflation pressures and that is why we are selling off today. tom: it is remarkable to me that the markets are pricing this in. have seen over the last four weeks what has been happening in shanghai but the markets are
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blasting through at the rate that this could spread across china. marty's complex, what does it do for commodities -- the commodity complex, what does it do for commodities longer-term? mark: we knew this for months. we knew that china's covid policy was going to be a big issue this year. the thing that seemed to work well seemed to pass quite quickly and there are these loophole factors to keep operating. the disruption seemed to be less than people thought. people got so concerned for shanghai and now it is spreading to beijing and there is a big panic. china is delivering less easing than expected and now they are worried about capital inflows have the end weakening -- yuan weakening. the biggest consumer of commodities is china and there growth is going to get hurt.
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the secondary impact is that as the yuan is weakening, it hurts their purchasing power as well and that is why you are seeing the commodities currencies suffering today. francine: when it comes to the french elections, the markets saw it possible as a big of a shock as brexit or the u.s. election with donald trump, but is it all of this distraction from china? mark: the great question. you think we might have learned from the last six years the price more of an element of surprise, but it wasn't priced in. there was just an assumption that macron was going to win. it is a political story, the divide in france and what it
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means for the french economy going forward. these elections will be very important in the coming weeks. from the markets point of view, the euro-dollar is having its worst day in april. everyone is trading. the massive risk aversion we are seeing, we are seeing a dramatic day in markets and that is overshadowing the big political story we have got. tom: the drama in these markets spelled out remarkably by mark cudmore. coming, encore. emmanuel macron clinches a second term as the french president. we get the latest from paris and we break down the indications on the need to focus on what happens when it comes to the parliamentary elections in june. stay with us. this is bloomberg. ♪
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tom: welcome back to the open. we are 10 minutes into european trading day. political continuity in france but the focus is on china and some lockdowns in the capital of beijing as officials brace for the potential spread of omicron. you are seeing losses of 1.5%
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across the benchmark. every single sector is in the red, led by basic resources. you are seeing iron ore fall below 7%. we are concerned about the market shift out of china. when it comes to the least affected sectors, utilities down just 0.4%, but every other sector taking a loss in the first minutes of the trading session. let's focus in on some of the individual corporate we are looking at. we are still in earnings season and we look at the impact on one particular miner. roche coming out with first-quarter earnings that beat estimates. the pharmaceutical, they are seeing demand start to weaken for some of their covid testing, but the broad picture out of the earnings quarter was positive.
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nonetheless, the stock is down 1.8%. we continue to look at philips. losses of almost 10%, this maker of ventilators. they are talking about concerns of inflation, supply chain, and the impact of the war in ukraine. the ceo says they will be implementing additional cost measures and price increases to mitigate. investors not taking heart from those comments. rio tinto, just one of the miners we talked about, down 4%. concerns about a dropping demand from china as omicron continues to spread and it is beijing that is in focus for us today. francine: in france, emmanuel macron has defeated marine le pen in the presidential election. while macron took 58% of the
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vote, making him the first incumbent in two decades to win the election. >> a majority among us made the choice of it and trusting in the presidency where the public in the five years to come. we have to consider the difficulties of everyday lives and respond effectively to the anger that has been expressed. francine: joining us now is maurice levy, chairman of publicis. thank you so much for making it smarter on the french and how they look on society. there is a parliamentary election. will macron have enough power to push through his reforms? maurice: with such a margin, he can govern. now we have to have a third run.
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what this election will give him the power or not to govern. we have the power to vote and now we have to work for the best. for the best to happen, we need to give macron a large majority. francine: you said that -- there were a lot of people that did not go to vote or they left a white paper because they did not like the candidates and 42% of those than this country voted for a far right candidate. what will emmanuel macron do now to unite france? maurice: the problem is not only the people who have nothing because the people who have nothing, they are more or less well taken care of. the real problem is the lower business class. -- lower middle class. they believe they are not taken care of, that they are left
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behind, and that the major issues are not addressed. school education, housing, security. the fact that these people seem unsecure, they have the feeling that the key issues are not addressed. francine: what does emmanuel macron mean to do to make them feel better? maurice: all of this will depend on how large it will be has majority. as you said, france is divided in blocs. the largest one is clearly the bloc of the central right and a little bit of the centerleft.
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far right, and it is impressive to have miss le pen get 42% of the vote. this is something that is dangerous because france is clearly divided. when you add the far right and the far left, you have a majority. so the extremes are the majority of france that are willing to make huge changes. the issues are still on the table. they are not resolved and all of the problems have to be addressed. it will not be easy. it will not be a walk in the park. the fact that macron has been elected as a good thing but there is a task ahead of him. francine: what role does a jean-luc melenchon place in the parliamentary elections? could he actually become prime minister? maurice: there is no chance.
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francine: not even if he rallies all of the left? maurice: not even if he assembles all of the left. if you look at the far left, it is slightly above 30%. the country is clearly on the right side. when you look at macron versus le pen, you have more than 50%. so there is little chance you should decide before the vote. it is extremely remote, may be a 5% chance that melenchon can become prime minister. when he says that we should elect him as a prime minister, he is saying something wrong because it is the president's
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--to choose the prime minister. francine: but if emmanuel macron needs to form an alliance, does he go to the left or the right? maurice: the most practical one will be with -- and the most plausible alliance will be the right with the large as that he has. francine: how do you see macron governing over the next five years? pushing the reforms that the people don't want because he just got elected or addressing the cost of living that marine le pen put forward? maurice: we have an example with --. he has been elected with 82% because of -- barring from marine le pen. this has led to a tentative situation.
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he has done nothing. he has done absolutely nothing. it is the worst thing which can happen to france. france is in a situation that requires some important changes. the government has to address this change in education, in all of the structural reforms and make the country much more competitive. that would be the legacy of emmanuel macron. francine: if he does nothing, do you think marine le pen or another far right leader could become president in the next five years? maurice: it is too early to say. what might happen is what we call a strict -- protesting very
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high industries. this is probably what can create a big challenges -- a challenge for president macron. francine: thank you for joining us. that is maurice levy, supervisory board chairman of publicis. it is a crossover looking at some of the economic policies and politics in france. tom: a great way to put everything in context. coming up, u.s. secretary of state antony blinken and u.s. defense secretary lloyd austin had a conversation with the ukrainian president in kyiv yesterday. we get the implications of that meeting and on the war in ukraine.
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this is bloomberg. ♪
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tom: welcome back to the open. 23 minutes into european trading day. we talk about the equity markets and every single asset is moving on the back of what is happening in china. the stoxx 600 down 2% but the
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volatility is once again being underscored by what we are seeing amid the bid on the treasuries. in the euro zone, we see guilds as well so the benchmark for the euro zone, the german bund and the 10 year moving lower. moving lower by nine basis points so moving into those bonds. the same thing with the focus in france as the 10 year moves on eight basis points lower. the bcp as well, six basis points. there is a move into the bond markets as investors seek shelter given what we saw last week when yields appreciated on the back of some commentary out of ecb officials on a more hawkish start on the rhetoric side from the european officials. back to what is happening in ukraine, the latest on the war. antony blinken and lloyd austin were in kyiv, holding talks with
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president zelenskyy. forces -- russian forces from the east and south are failing to keep -- take the capital. maria tadeo joins us. there are concerns about a land grab bid. what is the latest? maria: yesterday was easter sunday for the christian orthodox and this was a big religion for russia but with ukraine there had been hope that potentially in honor of that easter sunday there would be a truce. you saw overnight that the bombing continued. in terms of the land grab, there are concerns that the russian army is now looking to make headway in the south of the country, in the east of the country, and eventually carry out those referendums and annex those territories into the
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russian federation. a lot of mere zelenskyy gave an interview -- of a lot of mere -- president zelenskyy gave an interview and he gave two conditions. if we see in a referendum -- if we see a referendum to annex the eastern part of ukraine or mariupol forces were killed, the peace talks would and. francine: where are the peace talks right now? maria: they are at a dead-end. vladimir putin is not interested in a diplomatic way and he wants a big victory there. that is a big soviet union victory and it is interesting to see how the language coming out of the united states, antony blinken was in kyiv yesterday and he says we will do everything to help ukraine. tom: maria tadeo in brussels
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getting us up to speed on the situation in ukraine. coming up, a big night for emmanuel macron. can he carry the momentum from his presidential election as of the upcoming president -- momentum from his presidential election into the upcoming parliamentary election? this is bloomberg. ♪
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>> welcome back to the open. 42 minutes into the opening trading day. losses of 1.5% across the benchmark. so much for the relief on the back of a macron victory. this is about what's happening in china. you are getting a move into safe havens and you are seeing that across bonds. the yields are lower across u.s. treasury but also german bones and even greek debt. the yields have come off a little bit but the investment move into bonds, flight to
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safety. the bloomberg dollar index is up. moves of almost 3%. wti below $100 a barrel. let's break down some of these market moves with our guest. thank you for joining us. your take in terms of this market repricing around china. why are investors so late? we are seeing it play out in shanghai. why the surprise around the limited lockdowns in beijing? >> i think we are having a risk off moment. china is one of the factors in terms of global growth. china is an important player. it looks to me that china needs a foreign vaccine, a political perspective that might be difficult. that added to inflations and is creating that moment.
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tom: do you want to be adjusting your portfolio in this environment? virginie: we have talked about -- i did not anticipate russia since november of last year. the key thing is to make sure your risk contribution from every stock is very mindful and you have enough diversification in terms of stocks in the portfolios. francine: good morning from sunny paris. what is the market pricing in right now? full lockdown? what are they really worried about in regards to china? virginie: it is really interesting. clearly, the lockdown might go to beijing is one of the worries. clearly, the concern about the lack of progress and how fast it has developed. from my personal view, why isn't
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china using some of the foreign vaccines that are proven to be much more efficient? pboc called for loosening measures due to the fear around gdp growth and the fact the congress is quite a ways away. all of this together is putting some of this risk off moment in china. francine: we have seen -- grinded to a halt. what is the significance of having such a big city in lockdown for international markets? what is the repercussion? virginie: you have the demand side, of course. there was a comment this morning about, it weakens a little bit. it is a little bit of a shift. you can look at second-quarter gdp which could be because of the lockdown as weak as 4%.
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interestingly this morning she jinping talked about china being instrumental in terms of bringing a peaceful process to the resolution with russia and ukraine. you can see a divergence and we also have a strong anticorruption campaign with more people being arrested. in a way, the preparation for the congress meeting and the impact on the economy will be clear, but we have to look through that. tom: certainly when it comes to european equities, there's a lot of exposure to china in terms of those businesses and their footprints in that country. walk us through what we have been seeing and how that informs your thesis going forward. virginie: in the u.s., earnings have actually been quite strong. if you look at the top five stocks like microsoft, google,
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netflix, facebook -- 40% of the drop yesterday. if you look at the earnings, over 70% of companies in the u.s. have top projection. the companies that have reported have shown better earnings than expected. in europe, things are a little different but some of the french companies came up with some stronger-than-expected earnings. i think there's clearly a deleted reaction -- a delayed reaction. the energy is at the core of the concern. francine: thank you so much, the global equities chief investment officer at allianz. we will have more a little later on. the fact the market is barely pricing in a surprise move and they are not moving at the moment. tom: we kickoff earnings week.
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big banks and big oil set to report. more on the outlook next. this is bloomberg. ♪
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european market open. let's zero in on the earnings picture, big banks, tech and oil
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all due to report earnings against the inflation backdrop and the war in ukraine. joining us now is tim, our european equity intelligence strategist. what are you looking forward to in this week of earnings? >> it is a huge week. we have got 150 out of 600 companies on the stoxx 600 reporting either earnings or sales. number two, we have seen notwithstanding the angst, rising earnings estimates. there is a 3% positive revision so far this year in total earnings growth expected for the european market. consensus hasn't balked, notwithstanding the angst. specifically in q1, consensus is for about 21% earnings growth.
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remember part of that is energy and materials that has just gone bonkers, part of that is the reopening trade which will start to laugh a little bit. but it's a critical period in the midst of all of this concern we have on rising prices, russian sanctions, what's going on with china. can companies raise prices, so there is a lot to chew through. francine: good morning from paris. what are you seeing in terms of inventories, margins, some of the key indicators we should be watching out for how those are going? >> it's interesting, francine. if you look at just early indications coming through, we have seen some points of reference on this. adb and [indiscernible] reported last week, both big
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industrial companies. they had surprisingly big order growth. if you look at asml and what they are saying about the semiconductor business, it is still very much constrained from the standpoint of being able to meet orders because demand is so robust. look at the complete other side of the sector spectrum and you have got heineken that had a really strong report from the standpoint of their topline as a reopening play. now all of these companies also are talking about the difficulty on delivering those orders, and thinking about what's going on from the standpoint of inflating cost and how strong can they raise prices? that's going to be the key tension we look for this week. francine: tim, thank you so much. i know you will come back on tv to bring us up-to-date with all
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the earnings. tim craighead from bloomberg intelligence. now onto twitter and elon musk, it's been at least 20 minutes since we haven't spoken about him. let's focus on one of the big tech companies that are due to report, twitter executives are set to be meeting as the social media company turns more receptive towards his takeover offer. the meeting comes days after mu sk revealed his financing plans which includes backing from morgan stanley and other financial institutions. here to talk about all of this is alex webb from bloombergquint to take, -- bloombergquint take, is this a concern if musk wins? alex: if you are saying that i am willing to enact a poison pill, that means you have got to be willing to engage with him if
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he offers that. he has spoken to shareholders, they have spoken to shareholders, the question is if this price is acceptable to him. just on that basis, the answer is yes. he has access to other capital. the question is if he is willing to sell down a state in tesla or spacex in order to fund it, and that seems unlikely. francine: alex, i was intrigued by emails over the weekend in relation to the 2018 tweet where he said he had financing in place.
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emails between him and the head of the pif when he was trying to take tesla private. it is a good insight into his thinking. alex: if anything, that he has learned lessons. that actually he did not have financing, he had some informal verbal agreements, but the texts seem to show that while there have been some encouragement from the saudi side, they have not had a chance to the key element that these presented from elon's legal record -- representation shows that the saudi's were interested in the idea. tom: the latest on elon musk's bid from twitter and the texts
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between him and the saudi sovereign wealth fund. surveillance early edition is up next. the markets are seeing losses of 1.6% stateside. the s&p many with losses of .8%. this is bloomberg. ♪
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this is xfinity rewards. our way of saying thanks, with rewards for the whole family! from epic trips... to the original jurassic park... on us. join over 3 million members and start enjoying rewards like these, and so much more in the xfinity app! and check out jurassic world: dominion, in theaters june 10th.
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>> we're re-examining carefully our trade strategy with respect to china. >> in defeat, i cannot help but feel a kind of hope. >> weeken -- we have to respond effectively to the anger that has been expressed. >> this is bloomberg surveillance: early edition with francine lacqua. francine: good morning and welcome to bloomberg surveillance early edition. here's what's coming up on


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